The CMS will be able to revoke healthcare providers or suppliers' Medicare enrollment if they are affiliated with targeted "bad actors," a final rule issued Wednesday established.
As part of the CMS' "Program Integrity Enhancements to the Provider Enrollment Process" going into effect Nov. 4, its new "affiliations" provision allows authorities to bar individuals and organizations that "pose an undue risk of fraud, waste or abuse based on their relationships with other sanctioned entities."
Medicare, Medicaid and CHIP providers will have to disclose any current or previous affiliation with an organization that has uncollected debt, has had a payment suspension under a federal healthcare program, has been excluded from those programs, or has had billing privileges denied or rescinded.
In addition, the CMS will be able to revoke or deny Medicare enrollment if providers or suppliers attempt to get back into the program under a different name, bill for services from non-compliant locations, exhibit a fraudulent or wasteful pattern of ordering services or drugs, or have an outstanding debt to the CMS from an overpayment that was referred to the Treasury Department. The agency may also prohibit an organization from participating in the Medicare for up to 3 years if they falsify their enrollment application.
The CMS said the new rule facilitates a more proactive approach to enforcement.
"For too many years, we have played an expensive and inefficient game of 'whack-a-mole' with criminals—going after them one at a time—as they steal from our programs. These fraudsters temporarily disappear into complex, hard-to-track webs of criminal entities, and then re-emerge under different corporate names. These criminals engage in the same behaviors again and again," CMS Administrator Seema Verma said in prepared remarks. "Now, for the first time, we have tools to stop criminals before they can steal from taxpayers."
The new rule will cost providers and suppliers $937,500 in each of the first three years of implementation to gather all their affiliation documentation, the agency estimates. The new revocation guidelines will lead to approximately 2,600 new withdrawals a year, netting an estimated $4.16 billion over a 10-year period, the CMS said. The agency could also save up to $4.48 billion over 10 years with the new reapplication provisions.
While it's good that regulators are trying to be more proactive, the new rule may have an overly broad reach, regulatory experts warned.
The CMS is essentially saying, "trust us, we'll only do this where we are convinced that there are bad actors who are intentionally and deliberately doing bad things," which is a scary proposition for healthcare organizations, said William Horton, a partner at the law firm Jones Walker.
"The troubling matter here is, these are draconian penalties levied essentially on a unilateral basis even before an affected provider or supplier has noticed they may be in jeopardy of having their enrollment revoked," he said. "Healthcare is already regulated in a way that gives a lot of prosecutorial and regulatory discretion to enforcement agencies, and this is adding layers to that."
After an individual or organization is penalized, an appeal process will likely be difficult, Horton added. The appeal will be framed under whether the CMS followed the right process to arrive at the sanction rather than if the CMS made the right decision with the penalty, he said.
The new rule could also further penalize and alienate quality providers who have to prove they have done nothing wrong, said Mark Silberman, a partner at the law firm Benesch.
"When the government picks the right data points, they absolutely can use analytics in a preventive way that will weed out and minimize the risk of fraud," he said. "But when they choose the wrong data points, they end up snaring too many good providers along with the bad."
Too many good providers have decided not to provide care to government beneficiaries because of the additional risk and oversight, Silberman said.
"While rooting out the fraudsters could be an important step to bringing providers like this back, misapplying this rule could usher further good providers out the door," he said.
Healthcare fraud has been the most active sector of the U.S. Department of Justice's overall fraud enforcement. Healthcare fraud and abuse cases have spiked since 2010, exceeding 400 cases a year, according to federal data. The government recouped close to $22.8 billion over that span.